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How a National Water Authority might work Seán Murphy

Chambers Ireland - National Water Authority

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Presentation to the Dublin Chamber of Commerce's Infrastructure & Transport Forum by Sean Murphy, Chambers Ireland, on plans to create a National Water Authority and how it could work best.

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Page 1: Chambers Ireland - National Water Authority

How a National Water Authority might work

Seán Murphy

Page 2: Chambers Ireland - National Water Authority

Funding Challenges

• Business is paying locally for the problems that we encounter daily due to the inadequate provision of funding at a national level.

Page 3: Chambers Ireland - National Water Authority

Water

• One of the core building blocks of an FDI proposition

• Taxes• Talent• Location• Electricity Supply• Water Availability

Page 4: Chambers Ireland - National Water Authority

Pharma and BioPharma

• Particularly important for this sector

• Wyeth in Grangecastle EUR1.8Bn invested in developing

• Pharma is strong in Cork for the same reason

• Clean Water Supply was a crucial Component of these decisions

Page 5: Chambers Ireland - National Water Authority

Major investments made

• 1994-2006: EUR4.4Bn invested in Water upgrades

• Yet upwards of 30pc of treated water is still being lost. (It was 43pc on ave in 2008 (Forfás) and some areas still exceed 50pc)

Page 6: Chambers Ireland - National Water Authority

Charging is the crucial element

• To fund infrastructure investment• Cut Demand• Incentivise better use• (A toilet scrappage scheme with

replacement of single flush to dual flush system would cut 15pc of total household usage – at a cost of EUR25m!)

Page 7: Chambers Ireland - National Water Authority

More Investment is Needed

• 2007-2015 EUR 4.75Bn?

• NDP was based on year on year growth rates!!!

• What now?

Page 8: Chambers Ireland - National Water Authority

Apply User Pays Principle

• Ireland is virtually unique in not charging for domestic water use.

• Water Services Act 2007 contains an absolute prohibition on domestic charges!

Page 9: Chambers Ireland - National Water Authority

It has been done before

• Domestic Waste Charges resulted in a dramatic decline in waste to land fill

• While water is free at tap it in fact costs EUR1.2Bn per year to deliver (Comhar)

Page 10: Chambers Ireland - National Water Authority

Charges Work!

• European Environment Agency (EEA) reports that ‘Water consumption by households has actually decreased in all regions of Europe in the past decade.

• This reduction can be directly linked to the water pricing and metering measures put in place to ensure the price of water better reflects its true costs

Page 11: Chambers Ireland - National Water Authority

Sliding Scale

• ‘Standard’ Access/Use charge incremented according to use

• This would drive our efforts to contain water use and fund infrastructure roll out.

• See: • Aurora, Colorado

Page 12: Chambers Ireland - National Water Authority

Aurora, Colorado

• 2000-2005 severe drought• 2002 Introduce a sliding scale of rising

charges – with a five-fold spread between the cheapest and most expensive block.

• This subsidised the availability of ‘smart meters’ for households that showed them how much they were using as they used it

Page 13: Chambers Ireland - National Water Authority

Aurora II

• Provided rebates for water-efficient indoor appliances.

• ($100 for one low-flow toilet to $400 for one water-efficient washer and two dual-flush toilets.)

• Almost immediate reductions in total annual deliveries of 8 per cent and 26 per cent in 2002 and 2003 respectively relative to the 2000-2001 period. (Comhar)

Page 14: Chambers Ireland - National Water Authority

Commission on Taxation

• Recommends that water charges be introduced.

• Water charges should come in two types: Flat rates for those without meters, and

• Volume-based rates for those with meters.

Page 15: Chambers Ireland - National Water Authority

Commission on Taxation II

• If flat rate set at approximately the average volume-based rate, then a substantial fraction of the population would have a reason to install a meter.

• If the flat rate is then adjusted to the average volume-based rate OF THOSE WITHOUT METERS, meters will soon be installed everywhere. If not, there will be a subsidy flow from those who save water to those who do not.(Tol)

Page 16: Chambers Ireland - National Water Authority

€175 Flat Rate Fee

• Not ideal...Does not incentivise conservation.

• But• It established User Pays Principle• Vital underpinning to a National Water

Authority model

Page 17: Chambers Ireland - National Water Authority

National Water Authority I

• Needs a Revenue Line• As a Semi State it will be able to raise

funds for infrastructure investment• Can achieve Scale• Strategic Vision• Cheaper storage of vital equipment• Separation of resources between

fresh/waste water maintenance/operations

Page 18: Chambers Ireland - National Water Authority

National Water Authority II

• Ireland as a whole is no bigger than any of the water Companies in the UK

• As with all infrastructure companies – size matters

• Scale also allows for prioritization of investment to locations with the greatest return potential

Page 19: Chambers Ireland - National Water Authority

National Water Authority III

• Must be on as regulated asset base model a la BGÉ or ESB

• Could bypass bureaucratic challenges to get approval for a water investment programmes

• NWA must also ensure that resources are prioritised

Page 20: Chambers Ireland - National Water Authority

Conclusion

• There is a good case for a National Water Authority

• Judicious use of incentives will drive take up and roll out of meters

• Implement the Commission on Taxation Recommendations... And secure cost savings from scale!

Page 21: Chambers Ireland - National Water Authority

Questions

[email protected]

• 01 400 4308

• 086 819 8766